The Ministry of Finance and the State Administration of Taxation yesterday
reiterated through the media their tax deduction policies for donations to
charities.
It is a move that should be welcomed because the policies have not been well
publicized.
However, more needs to be done to build a legal framework for donations and
make it known to the public.
China enacted a law on donations to public welfare in 1999 detailing the
rights and obligations of donors, beneficiaries and organizations managing
donated money.
But the country has not yet set detailed rules and regulations governing the
everyday aspects of welfare donations.
This has resulted in an enormous legal grey area, which has given rise to
such problems as ineffective use of donated money and disputes, driving away
many potential donors.
Even the existing rules have not been properly implemented. For example,
there has been a steady flow of complaints about local taxation officials' lack
of knowledge about tax deductions for individual donors, thus dampening
enthusiasm for donations.
This is a pity.
Besides benevolent people abroad who wish to help the needy in China, an
increasing number of enterprises and individuals within the country are
interested in philanthropy.
China is also in great need of multiple sources of social welfare.
Despite the State's soaring fiscal revenues, the country is not yet
financially strong enough to institute a social welfare net that covers
everybody.
Even when the country becomes more affluent, it will still not be capable of
meeting the welfare needs of the entire society, as in many developed nations.
This leaves room for people to help others plagued by poverty or
disabilities. Charitable donations are also important in emergencies such as
natural disasters.
Apart from a legal framework, the country also needs many more trustworthy
charity organizations to make sure donations are well used and reach the
intended beneficiaries.
China is short of talents in managing such organizations. However, the lack
of regulations governing the management of these charities is also a
drawback.
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